CONDUCT AND CULTURE IN FINANCIAL SERVICES

R&C: Could you explain the difference between good conduct and good culture?

Hill: A broad consensus has emerged on how to define ‘culture’ and ‘conduct’. Culture is commonly viewed as the values, attitudes and assumptions manifested by a company in its interactions with stakeholders, while conduct is seen as the way in which these characteristics reveal themselves in behaviour. Agreeing what ‘good’ looks like, particularly with respect to culture, has proved more challenging. This is demonstrated by the UK Financial Conduct Authority’s (FCA’s) decision to drop its proposed 2016 thematic review of banking culture, blaming the “idiosyncratic nature of individual institutions” for the difficulty of issuing generalised guidance. A firm’s culture must be unique – consistent with its strategic objectives, values and approach to interacting with stakeholders. It is imperative that a firm’s culture promotes the fair treatment of customers, particularly in how it incentivises employees to act, and this is where conduct – the measurable behaviours that influence customer outcomes – becomes so important. Good conduct follows good culture.